All posts tagged Birinyi Associates

The S&P 500 jumped 10% in the first quarter, one of its better showings to kick off a new year. What historically happens next isn’t quite so bullish.

Rob Leiphart at Birinyi Associates points out there have been 12 other years dating back to 1929 in which the S&P 500 rose by at least 10% in the first quarter. In 11 of the those 12 instances, the S&P 500 finished those years in positive territory, with 1930 being the lone outlier.

However, much of those full-year gains were front-loaded in the first three months of the year.

After digging into the guts of the stock market’s first-quarter rally, the folks at research firm Birinyi Associates conclude: “This is a really tough market to beat.”

The firm looks at the S&P 500′s advance/decline line, a metric that measures how many stocks rise on a given day compared to how many that fall. The firm added these daily numbers through the quarter to come up with a cumulative figure.

Throughout the first three months of the year, the S&P 500′s cumulative “A/D” line is +4,012, which Birinyi notes is much higher than recent quarters in which the market notched similar overall gains.

“In effect, everything is going up, which means you have to pick the best of the best,” Birinyi says. “It also suggests that funds will have a hard time beating the benchmark.”

How much longer can the market rally without a 10% correction? Perhaps much longer.

This morning we wrote about how the S&P 500 has gone more than 500 days without a 10% correction. Such a long rally isn’t unprecedented. Since 1962, there have been five other instances in which the index has rallied for at least 500 days without a correction, according to Birinyi Associates.

In all five rallies, stocks averaged another 9.2% gain over the next six months and a 13% increase over the ensuing one-year time frames.

About MarketBeat

MarketBeat looks under the hood of Wall Street each day, finding market-moving news, analyzing trends and highlighting noteworthy commentary from the best blogs and research. MarketBeat is updated frequently throughout the day, helping investors stay on top of what’s happening in the markets. Lead writers Paul Vigna and Steven Russolillo spearhead the MarketBeat team, with contributions from other Journal reporters and editors. Have a comment? Write to paul.vigna@wsj.com or steven.russolillo@wsj.com.

Global investment banks got a second-quarter revenue boost from a surge in Asian stock trading. But given China’s market volatility and stock declines in some other countries, those revenue gains may be hard to replicate.